of san jose, getting their input, because the america's cup has never been about san francisco. it is about san francisco as part of the region, welcoming one of the graces -- degraded -- the greatest races in the world. we would love to continue posting it in an item -- hosting it ad infinitum. that would be great. we have the budget before. the fight's over what to save and what not to save have become the brunt of many jokes about the city. in getting the budget into a more serious situation. i am bringing before you a copy. the first copy of the press. it is a new book. "a 5-year financial plan for the

city and county of san francisco." i am trying to change the way we talk about the budget, so we approach it from a more solid financial planning instrument. not just trying to fill holes and argue about each year's gap, but to suggest to you, there is financial stability if we plan for financial stability. all of you know that. you know that from your old way of conducting your own lives. i have known that, too. as a city administrator, when we introduced the 10-year capital plan, and we started telling departments, we are no longer satisfied, we need to put this in priorities, because in order to keep the promise to the system that we will not increase taxes and still views are bond programs responsibly, -- and still use our bond programs response of, we have to do it.

i am no longer satisfied, and none of us should be, about the annual budget. it should be five years of budget planning, put into discipline, make sure we have goals set out, and built according to that plan. that is how we get to financial discipline. that is how we have to approach pension reform. i will be before you and the general public with the hope that we have only one pilot rejectballot -- ballot measure before you, to have one plan before you this fall that will tell you how we're going to correct the cost overruns of our pension and health costs to our employees and make sure we are on our road that no longer interferes with our general fund to the tune of $125 million, as it is doing this year.

again, a lot of time spent on the finances of this city, and i get to do it in the most non- political way. if there is anything i can say that is fun, it is fun to talk to people without having to create new provinces -- promises, and maybe fulfilling once we have had. making the city safe, solvent, and finally, the other principal i shared with the department of the budget -- making the city continue to be successful. that goes back to what brought you to san francisco? what need to invest? it is because of the diversity. it is because we have a very excited counselor for. we are all working together to

bring in the sister cities and make sure we have excitement as a world-class international city, because with that comes the interaction of culture, more business, and the learning of what other countries are doing. and just the hope that because we signed the united nations charter here, that we continue that dream, that san francisco becomes the place where we continue to dialogue and we can suggest we can still have that international dialogue here. that, along with the perverse -- diverse corridors of the city, that is part of being a successful city. i want to continue that. to continue to have us face -- a safe, soldan, and successful city. and i can do that in a non-

political way. i think the unprecedented dialogue with the board of supervisors, that we can get agreements, not yell at each other, not take some much political positions that are for san francisco. i think you for this time and i would be very willing to answer questions tonight. [applause] >> thank you. before we talk policy and the city stuff, i want to talk a little bit more about growing up in seattle. the fourth of six kids. tell us about the way you grew up, hal is shaped who you are now? mayor lee: i do not talk much about it because it was a hard life. we grew up in housing projects

in seattle. we struggled. we were a large family. my dad was a cook. my mom was a seamstress. so, kind of typical for a lot of asian immigrant families. i had the unfortunate episode of my dad dying when i was in high school. so we literally had to be on our own. six kids, one long, full time seamstress. we struggle and sacrifice and we learned how to enjoy life. that is how you get these stories about our little christmases. we actually had a lot of fun wrapping up presence in the basement. i remember that. because i was in the middle of the pack, my older brothers got everything. they got to play football. they got to do a lot of things

american kids wanted to do. we ended up -- my younger sister come in under brother -- we were the last three in the family. we cleaned up the house. i did all the gardening in the house. we did all those things. those things that we had to do. we had to keep up. we worked hard. i worked in restaurants in my early days. i got a call to go to this great college that was recruiting people from the west coast. my history teacher, i will never forget him. he said that i was not made for the university. university of washington was where everybody went unless they got lucky and went to harvard or yale. about put on the waiting list for some of those. i did try. -- i got put on the waiting list for some of those.

i did try. this little university was willing to give me a four-year scholarship. i took a risk. it was one of the best decisions i made. it was one of the best experiences i had come up being in one of these small liberal arts colleges. it was completely on the opposite side of the world. >> you were one of the few asians there. there was a bristly joke -- bruce lee joke. >> do not talk to my wife. she has these pictures of me in college. my hair was down to here. they did not know what i was. i had a mustache, long hair, big glasses. you cannot tell if i was russian or indian. [laughter] you have to ask. i got a lot of those questions. when people found out i was chinese, and was one of five on

campus. there was a lot of ignorance about chinese-americans on the campus. i had two jokes. i was either bruce lee's brother or a descendant of robert e. lee. [laughter] whenever i got really patriotic, robert e. lee. [laughter] that is how i got into college. [laughter] i used that opportunity in those four years to allow my mind -- i loved studying. it was one of those places where you can read books come interact with professors -- read books, interrupt with professors. none of my class is had more than 10 students at a time. they could interact with you. that was the most welcome ing

part of the college experience. >> you said you are here on a part-time or temporary basis. you do not want to be mayor. you want to have your old job back. it pays more. there are already several people running for mayor. you have until august to make a decision. what if some of your powerful friends came to you and said they did not like to was leading in the polls invite you to run, would you consider it then? >> they have already done that. as powerful as they are, i have been very polite in telling them that i think it is neat to have a mayor go back to helping the city in a different way. if i have a time now where i can change some things so that there is a more unified thought

process in the city, perhaps the standards, actions, and dialogues are more open and we help change the economic and business climate in the city to support the things i have talked about already -- i can help to carry those things out. i do not think you have to be mayor to do it. i understand the power of the mayor's office. i feel i will exhibit my best contribution while this time is here. i will do my best and hopefully will have left with a positive legacy and stay here to help carry some things out. >> how do you deal with the lame duck thing? >> by not quacking. [laughter] i am working on things that need so much attention that there is no such thing this year as lame

anything. people want to continue the dialogue about how to get things done. this so much to do. -- there is so much to do. i set out these five priorities. i feel like we will get to many of them in a positive way. there are so many other things coming that were not part of the agenda. mid market and other places are going to happen. they need constant attention by somebody who can pay attention to it. the person who cannot pay attention to it is the person running for another office. the person who can pay attention is someone who has set aside everything and said they're going to pay attention. that is what i want to do in whatever capacity i have. the midmarket payroll tax thing has caused other businesses to come forward. i have a group of technology companies talking with us about

how we can help them. that has led to another group of businesses who came forward. i have talked with them. these companies have been here for a long time. they want to make sure they continue to have a great connection. they are still contributing. this last weekend, i was participating in a program that used to be called christmas in april. it is now called rebuilding together. they were doing 100 projects on saturday throughout the city. 39 of them were in district 11. i had to be there. i went around to some of the projects. there were hundreds of volunteers from wells fargo, adobe systems, all of these companies that have volunteered.

they are corporate center since -- their corporate citizens. they have been around a long time. i hope to continue working with the established companies that have been here sacrificing and being part of the city and in welcoming in a new generation of companies that i would also call san francisco companies that will be the new philanthropists, the new ceo's that want to make san francisco their focus. >> this new group, these companies are doing well. do they need the corporate welfare we're handing out to them? >> some people may refer to it as corporate welfare. i do not. i have been learning and all this need to learn more about how companies grow. -- and all of us need to learn

more about how companies grow. there are times when you think they're making a lot of money, but there are shareholders and expenses in the city. companies have a choice. time and time again, i am reminded that companies have a choice. they do not have to be in san francisco. many of them are not wanting to be in san francisco. it is their work force that is telling them they should be in san francisco. they may lose that intelligent work force if they leave. it is not economically sound for them to be here. we have higher taxes. we have other disincentives. i am trying to work on those to make sure we're even. the discussion around. tax exemption is kind of punishing people for having large employee groups. why are we doing that as opposed to having a tax base that could generate the same amount of revenue without being so punishing against the numbers of

employees you have? we're trying to grow jobs. there are things these companies are talking to us about that we have not had a good dialogue around for many years. i would not accept the premise it is corporate welfare or give away as much as reigniting the things we always wanted companies to do with and for the city. in addition to employment, they spend a lot of time donating to great causes and being part of a good public-private relationship. >> many companies talk about and threaten to leave. the public policy institute did a study saying that there are few companies that moved out of state. >> i still remember those days when chevron moved. bank of america moved. these were huge partners for many decades. they were icons, if you will.

they moved. what may not be as clear to people is what companies are located in silicon valley and brisbane that are not here. i would have thought they would have moved here first, but they are not here. when you look at those companies like google or hp or other silicon valley's, that is why i went down to talk to the silicon valley leadership forum. there ceo's -- their ceo's had a chance to coordinate with us. they were telling us why they would not moving to san francisco. that gave me another agenda that is not corporate welfare. what can we attract here for them? the key is education. we've got to have an intelligent work force that

keeps them wanting to be here. that is the number-one thing. that is why i investing so much time in creating a strong connection with our city college, school district. they've got to make sure we have a very integrated education system. that will be a key for many years to come. they tell us in no uncertain terms that they come here because these are the best minds. if they have marginal engineers , just being here makes those engineers better when they are interacting with better engineers in the city. they told me about that as well. i think there are many ways to attract businesses. i know that will be a key to any strategy to have a continued educated work force. >> you know better than anybody where the bodies are buried.

you have been a city administrator, fraud investigator. there been 10% cuts with another 10% contingency. all of the fat has been cut in previous years. where would you cut? where could the city save some money? >> my very first job was the whistle-blower investigator under the mayor. some people believe there is some truth to why i have accelerated in of my jobs needed because i know where all the skeletons are. i think the secret to our budget -- we are scraping to the bone. it will be a combination of evening things out. our public safety division's have to get smarter about what

they're doing. this move that the chief made the of the day -- the other day with assistant chiefs. he determined he did not need four assistant chiefs. one of the first moves he made before asking the work force to contribute was to make them deputy chiefs. that save $75,000 right there in salaries. i think there are more efficiencies to be had. this is where we get ideas even from city employees that tell me what we can do to save on workers' comp, expenses we should not be spending. some areas need to shrink in terms of the work force. we're contemplating those as well. we're still keeping our promise of having a core amount of services that the city needs to have and capital funding.

there are departments -- no one is being left alone this year, including public safety. in the past, there were public safety agencies that were hands off. maybe they gave what they thought was contributory in terms of salaries. a lot of us did even more. we actually got decreases. as of july 1, i am making $10,000 less than what i am making today. my salary will be $10,000 less. we are contributing to the pension system as of july 1. sacrifices are being made throughout the work force. people know that i have worked alongside with. i truly appreciate these

efforts. i am working closely with them on the biggest challenges. >> will it be fewer officers on the street with less money -- or less money? >> i think it will be less money. we want to have an approach that has the same number of officers. we may not be getting new classes for recruiting new ones. we still have the ability to higher across different cities. people want to come to san francisco to work. if we do have retirement spots open, we will do cross hires from other departments and other city departments. >> you are listening to the commonwealth club of california radio program. we're talking with ed lee, mayor of san francisco. speaking of the police department, one of your first moves was to hire a police chief.

the head of the police union was overheard saying that he bought the appointment. others have said he is a member of the old boys' network. was that a political choice, that the union got one of their own as chief, that they might be more amenable to renegotiating the pension and kicking back the money in sour or forgoing raises for a third consecutive year? >> none of that injured into my decision making at all. it occurred so suddenly. they were literally confirming the as the vacancy was created. i asked the very same commission that helped to select the last

chief to use the same process to come up with the best group of candidates. i reviewed it things with them about what they went through. i had concerns about whether they had open dialogue with the communities of the city, whether they had contact with all possible candidates. they did a very thoroughly vetted process. once i was satisfied with that, i proceeded to look to the recommendations they had. i interviewed each won twice. -- each one twice. focused solely on who was the best. i interviewed groups of people within the work force. they have strong opinions and

wanted reflections on what the chief should be in addition to the commission. i had various people throughout the city tell me. i got tugs on the suit jacket and everyone of these come hall meetings about people that were important to them. a lot of different names surfaced. that all came into play along with my serious look of someone who will continue reforms, making sure we have a dedicated effort to train officers so they would not cross the line. that was another part of my objective. someone i think would not only continue the reforms but present a command presence for the public as well in someone who the public can talk to.

a continued to smile. it has nothing to do with politics as much as people have known chief suhr for a number of years. the critical factors were about what people who knew him by the first name and the kids who knew this captain surh who was there supporting the boys and girls club, the ymca in the community. he did the same thing when he was captain in the mission. his reputation around the police department has been impeccable. his life has been exposed. so has mine. in my last interview, i did tell him that some people may say that you are part of the old boys' network. we have the conversation about what his life has been about.

>> he said it is like me. we had a chance to work with each other. we went back to the years when he was out of uniform and working with the puc as kind of their homeland security. i had a chance to work with greg. he thrust himself into that job so thoroughly. he began to know all of the intricacies of the water system. he knew the groups there. he interacted with the federal state authorities for that. he did a very thorough job. that kind of focus and dedication said to me that he can take care of the changes needed in the department, make the commitment, and see it through. those were the final decision makers for me, how he would

continue making the change. i have said over and over that he is the guy who will change the place from inside out. that is a very different approach. >> the city owes $4.26 billion in promised health care benefits to employees and retirees. you have your own pension reform plan and health care reform plan. there is another one that is tougher. labor groups have a third one. how do you bring these three plans -- how do you bring everybody together on that? what is their incentive to come to the table and agree on anything? >> the biggest incentive i could produce is that all of the proposals we are putting forth

with the labor unions, supervisor elsbernd, and other supervisors we have been keeping in touch with, is that we're having each of our provisions reviewed thoroughly by professional actuary folks that we know. there are third parties as well. warren helmond brought in third parties. we also have the official family of reviewers through our controller's office. there is someone else was during much a political in this. he has people on his staff and people he hired as independent contractors reviewing the actual numbers of what we can save with each proposal. with that kind of expertise